PetroChina supplier Wison says chairman 'assisting probe'

Charlie Zhu, Ben Blanchard

5 Min Read

HONG KONG/BEIJING (Reuters) - The chairman of a Chinese oil engineering firm is helping the authorities with an unspecified investigation, the company said on Tuesday, amid a widening corruption probe into PetroChina (601857.SS) (0857.HK), one of its major customers.

PetroChina's logo are seen at its gas station in Beijing, August 29, 2013. REUTERS/Kim Kyung-Hoon

Wison did not elaborate on its filing to the Hong Kong stock exchange, which it said was issued after Chinese media reports about its business ties with PetroChina. Hua could not be reached for comment.

PetroChina is Asia’s top oil and gas producer and one of the world’s most valuable listed energy companies.

The government said on Sunday it was investigating Jiang Jiemin, a former chairman of PetroChina and also parent company China National Petroleum Corp (CNPC), for “serious discipline violations”, shorthand generally used to describe graft.

Similar investigations were announced into four other executives last week, three from PetroChina and one from CNPC.

Wison’s share price has fallen nearly 30 percent since those investigations were announced. Its stock was suspended on Monday, although the company said it was operating normally.

Jiang had since been sacked as head of China’s state assets regulator, state media said.

He rose to prominence with the support of Zhou Yongkang, who stepped down last year from the elite Politburo Standing Committee, where he was China’s domestic security chief.

On Friday, Hong Kong’s South China Morning Post newspaper said China’s leaders had agreed to open a corruption probe into Zhou. The government has not commented on the report.

TIGERS, NOT JUST FLIES

President Xi Jinping has made fighting pervasive corruption a central theme of his new administration, vowing to go after “tigers”, or senior officials, as well as more lowly “flies”.

The official China News Service said on Tuesday that Zhang Shuguang, a former senior official with the Railways Ministry, had been charged with accepting more than 47 million yuan ($7.7 million) in bribes over 11 years.

It said Zhang was a close associate of former railways minister Liu Zhijun, who was given a suspended death sentence in July for corruption.

The investigations into PetroChina and CNPC were announced shortly after the close of the trial of Bo Xilai, once a rising political star who is now awaiting a verdict on charges of graft, bribery and abuse of power.

All the investigations were spooking executives in the state-owned sector and even at big privately held Chinese companies, people familiar with the situation said.

“Everybody’s nervous,” a source with ties to China’s financial sector told Reuters. “They’re going after tigers, and not just flies.”

Wison provided engineering, procurement and construction services to PetroChina and other domestic and foreign companies in China in the past few years.

Its website shows many members of its board and senior management team are Chinese oil industry veterans, including former officials at CNPC.

The PetroChina projects included refining and petrochemical complexes in the southwestern province of Sichuan and northwestern region of Xinjiang, and a refining project in the northeastern city of Dalian, according to information posted on Wison’s website.

Its revenue from contracts with PetroChina and its subsidiaries in the first half of 2013 was insignificant, Wison said. PetroChina was one of its biggest customers in prior years, according to the filings.

Hua had a 78.13 percent stake in Wison as of June 30. The company has a market value of $1.04 billion.

The stepped up corruption campaign has prompted government departments ranging from the National Bureau of Statistics and the Culture Ministry down to provincial land bureaus to issue statements affirming their support for the crackdown.

The ruling Communist Party’s Central Commission for Discipline Inspection as well as the Ministry of Supervision also launched a new website on Monday, with a section for people to report graft allegations.